The effects of wage indexation on macroeconomic fluctuations. A generalization

Alex Cukierman*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

This paper investigates the effects of wage indexation on fluctuations in employment, output, investment and the price level within a more general framework than that used in recent literature. The generalization involves: (a) a more general labor contract which allows labor supply as well as labor demand to affect actual employment in disequilibrium, and (b) a regular IS-LM framework which includes the previously used monetarist framework as a particular case. It is found that the effects of wage indexation on fluctuations in various economic variables depend in many cases on whether demand or supply dominates the labor market in disequilibrium. The exact dependence is characterized and used to reappraise recent results and develop new results.

Original languageEnglish
Pages (from-to)147-170
Number of pages24
JournalJournal of Monetary Economics
Volume6
Issue number2
DOIs
StatePublished - Apr 1980
Externally publishedYes

Fingerprint

Dive into the research topics of 'The effects of wage indexation on macroeconomic fluctuations. A generalization'. Together they form a unique fingerprint.

Cite this